Is DDB Losing Its Touch With Creative and Clients?

CHICAGO (AdAge.com) -- The theme at this week's 4A's convention might be "transformation," but for one major agency -- DDB's U.S. network -- change isn't coming quite fast enough.

DDB has regularly stumbled in major new-business pitches, suffered major setbacks on key accounts such as Anheuser-Busch, State Farm and Wrigley, and gone two years without a creative leader at its largest and most important office. And while most of its big-creative-agency peers are urgently restructuring in order to better integrate digital and direct marketing into their core creative offerings, DDB continues to stand by its silos.

DDB North America President Dick Rogers says the agency is 'one win away from an attitude shift in the marketplace.'
DDB's top executives insist the network isn't broken (North America President Dick Rogers says it's merely "one win away from an attitude shift in the marketplace"), but evidence to the contrary is piling up -- and fast.

"They still try to position themselves as a highly creative place that can create buzz, but something has clearly slipped," said a search consultant whose firm has had the agency in pitches recently. "They do not have digital prowess, nobody thinks of them as well integrated and, frankly, they're simply not delivering the creative goods right now."

Trouble signs are evident on accounts that have, for decades, represented the agency's creative and financial core: Wrigley, Anheuser-Busch and State Farm. A-B last month dealt DDB a major public embarrassment, rejecting every one of DDB's Bud Light ads for last month's Super Bowl in the wake of the worst sales year in the brand's history.

Rejected work
Now that A-B is no longer independent, DDB simply doesn't have the close ties to the brewer that it once did. Its biggest internal advocate, former A-B Chief Creative Officer Bob Lachky (a former DDB employee), departed A-B early last year. And the agency's longtime top management executive on the account, Steve Jackson, left the network last month.

Still, DDB executives insist the relationship remains strong, and they point to landing creative assignments on key brand extensions such as Bud Light Lime and Bud Light Golden Wheat as evidence. They also boast that DDB was recently named Budweiser's global agency of record. "Our relationship [with DDB] is still strong," said A-B VP-Marketing Keith Levy, who added that the Super Bowl snub simply occurred because DDB's work didn't test as well as others. Of course, Mr. Levy acknowledged, DDB's job is to do work that resonates well with consumers. "They'd be the first to admit that. They understand it. And they've put it on themselves."

A more significant blow is State Farm's decision to shift a significant portion of its creative account to Interpublic Group of Cos.' DraftFCB. DDB has handled State Farm's business for 70 years -- a tenure so impressive that the relationship was featured in a 2007 Ad Age story about enduring agency-client partnerships.

But the insurer has shifted all of its line-specific creative -- anything dealing directly with auto insurance, life insurance or any other specific line of business -- in the wake of a compensation review last year by the marketer that is believed to have taken a bite out of what were long believed to be the agency's fattest margins.

The work headed to DraftFCB is said to account for at least 30% of the marketer's creative, a significant haul considering State Farm boasts a $570 million marketing budget. DDB remains State Farm's agency for corporate and general-branding work.

Missing leader
The A-B and State Farm woes have been exacerbated -- if not caused -- by DDB's inability to land a creative chief for its crucial Chicago office, the network's largest, two years after the last person to hold the job, Paul Tilley, committed suicide.

The network is said to be close to finally naming a replacement, but it's been rejected by at least three candidates. The difficulty in filling a job that launched the likes of Mr. Scarpelli and Keith Reinhard to industry prominence speaks to how far the agency seems to have fallen.

DDB Chicago President Rick Carpenter said the agency is finally "close to an announcement." But he disputes that the inability to fill a generously salaried job that has historically been a turnkey to industry prominence is any sort of indictment of the state of the agency or its reputation. "Look, it's a very small pool of super-talented people that can do this job well, and most of those people already have really good jobs," he said. "I'm confident in our position and in the work we're doing."

And then there's the question of new clients. The network has struggled in major new-business pitches, most notably losing out on U.S. creative duties for Volkswagen, despite handling the brand literally everywhere else on the globe. Bids for Tylenol, Radio Shack, CDW and Cadillac turned out no better. It also squandered a once-promising piece of business on Wrigley's creative roster when it lost the gum maker's Extra brand last month to BBDO, leading to about 15 layoffs at its Chicago office.

Certainly, DDB isn't alone among struggling networks, but it has, in many respects, been among the slowest to adapt its model to the changing media landscape. DraftFCB and Publicis Groupe's Leo Burnett have more closely aligned themselves with direct-marketing siblings; WPP's JWT has largely retrenched from a web of regional offices into a centralized creative powerhouse in New York; and even big-agency poster child McCann Erickson shook things up recently when it put veteran media executive Nick Brien at the Interpublic network's helm.

Silos
DDB, by contrast, hasn't made similar moves, continuing, for example, to house most of its digital capabilities in siloed sibling Tribal DDB, a move that search consultants and rival agency execs say has held up the mothership's ability to keep up with competitors in a crucial discipline.

Speculation has been rampant that the agency is considering merging DDB with Tribal DDB. The two networks have few obvious client conflicts standing in the way of such a combination, but Mr. Rogers said it's not happening, at least not anytime soon, because having Tribal under a separate profit-and-loss statement gives clients the option of hiring a pure-play digital agency.

"We're into obliterating the silo mentality," he said. "But we have to reflect the marketplace as it is."

Competitors and search consultants question whether any network can successfully balance being so many different things for so many different clients when it comes to such a central discipline. "A lot of people question siloing off digital," said a search consultant whose firm has handled major reviews in sectors where DDB has aggressively sought clients lately, such as automotive and retail. "It shouldn't be specialty. It should be a core competency."

The same consultant notes the network looks essentially the same today as it did when then-DDB Worldwide CEO Ken Kaess died from cancer in 2006. His successor, Chuck Brymer, made early proclamations about turning the network into a "swarm communications" outfit that would transition from interrupting consumers into galvanizing communities, but if the network has gone through any dramatic change, it hasn't been in public view. "They really haven't made much noise since Kaess left," he said. Mr. Brymer, who is said to support the alignment between DDB and Tribal, declined to comment for this story.

Mr. Rogers acknowledged the formidable pile of issues the agency faces, but said the picture inside the agency is rosier than what that series of public setbacks suggests. Asked why anyone should hire DDB over its big-network rivals, Mr. Rogers said that the network's point of difference is its ability to customize its offering for individual clients, while at the same time delivering "talk-value creative." The consistent success of McDonald's, he said, is evidence that the agency's creative is effective. And he notes that its flexibility helped the network lure H&R Block (which came without a review, thanks in part to the tax preparer's executive suite being populated with former McDonald's execs) and Blockbuster last year.

In Blockbuster's case, the customization may have gone overboard: To win the account, DDB created a 100-person unit, DDB Entertainment, based in Dallas and Los Angeles -- a remarkable expenditure for a marketer that, both at the time and since, has been largely preoccupied with staying out of bankruptcy and modernizing a severely outdated business model. H&R Block, by contrast, was won with a multi-office solution that combined New York-based account management and Chicago-based creative.